Hyliion Holdings (HYLN) risk factors, FY2025 10-K

What changed since the prior 10-K

New

• NewRisks Related to Our Business

  We may experience significant delays in the design, production and launch of the KARNO generator which could harm our business, prospects, financial condition and operating results

  Commercial deliveries of the KARNO generator are not expected until late 2026 or later, and initial deployments may generate no revenue or require discounts.

• NewRisks Related to Our Business

  We are an early-stage company with a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future

  The company reported net losses of $57.2 million in 2025 and $52.0 million in 2024, requiring significant additional capital for R&D and production.

• NewRisks Related to Our Business

  service our KARNO Power Modules, our margins, profitability, and long-term prospects will be materially and adversely affected

  The company has no large-scale manufacturing experience for the KARNO Power Module and must scale processes and manage costs to achieve profitability.

• NewRisks Related to Our Business

  Significant markets for our KARNO Power Modules may develop more slowly than we anticipate or may never develop at all. This would significantly harm our revenues and may cause us to be unable to recover the losses we have incurred and expect to incur in the development of our products

  The distributed power generation market may develop more slowly than anticipated, and customers may prefer traditional grid power over the KARNO technology.

• NewRisks Related to Our Business

  We may not be able to successfully engage target customers or convert early-stage products into meaningful orders in the future

  The company may fail to convert early-stage products into meaningful orders or experience product performance issues requiring recalls.

• NewRisks Related to Our Business

  Our products may not be suitable for defense applications

  KARNO Power Modules have not yet been tested in maritime or other defense applications required by the Office of Naval Research.

• NewRisks Related to Our Business

  If we fail to manage our growth effectively, including failing to attract qualified personnel, we may not be able to develop, produce, market and sell our distributed generation products successfully

  Intense competition for skilled engineers and technicians in Austin, Texas and Cincinnati, Ohio could impede growth and increase compensation expenses.

• NewRisks Related to Our Business

  We are subject to the risk of manufacturer concentration in the additive printer market

  Production of the KARNO Power Module depends entirely on specialized additive printers purchased from a single vendor, Colibrium Additive.

• NewRisks Related to Our Business

  We are in the early stages of developing key commercial relationships with suppliers, and our ability to predict the outcome of those relationships is limited

  The company relies on an early-stage, limited number of suppliers for generator components, exposing it to potential cost increases and supply interruptions.

• NewRisks Related to Our Business

  Increases in costs, disruption of supply or shortage of our components could harm our business

  Future commercial production of KARNO modules may face component cost increases, global supply shortages, and price volatility.

• NewRisks Related to Our Products

  If our KARNO Power Modules fail to perform as expected, our ability to develop, market and sell our products could be harmed

  Design and production defects in KARNO Power Modules could lead to costly repairs, product recalls, warranty expenses, and reputational damage.

• NewRisks Related to Our Products

  We have limited experience servicing our KARNO Power Modules and our integrated software. If we are unable to address the service requirements of our customers, our business, prospects, financial condition and operating results may be materially and adversely affected

  The company has limited experience servicing high-voltage KARNO products and may struggle to build internal capabilities or find third-party service providers.

• NewRisks Related to Our Products

  We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims

• NewRisks Related to Our Financial Results

  Our financial results may vary significantly from period to period due to fluctuations in our operating costs and other factors

• NewRisks Related to Our Industry and Competitive Landscape

  We expect to face significant competition in the distributed generation and R&D markets

• NewRisks Related to Our Industry and Competitive Landscape

  Developments in alternative technology or improvements in distributed generation products may adversely affect the demand for our products

• NewRisks Related to Technology, Data and Privacy-Related Matters

  The use of artificial intelligence and machine learning technologies may present additional risks and challenges or exacerbate other risks to our business, which could result in reputational and competitive harm and adversely affect our operations

• NewRisks Related to Technology, Data and Privacy-Related Matters

  We are subject to cybersecurity risks to operational systems, security systems, infrastructure, and customer data processed by us or third-party vendors or suppliers and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent us from effectively operating our business

• NewRisks Related to Technology, Data and Privacy-Related Matters

  Any unauthorized control or manipulation of the information technology systems in our KARNO Power Modules could result in loss of confidence in us and our power generation solutions and harm our business

• NewRisks Related to Technology, Data and Privacy-Related Matters

  We may need to defend ourselves against patent, copyright or trademark infringement claims or trade secret misappropriation claims, which may be time-consuming and cause us to incur substantial costs

• NewRisks Related to Technology, Data and Privacy-Related Matters

  Our business may be adversely affected if we are unable to protect our intellectual property rights from unauthorized use by third parties

• NewRisks Related to Regulatory Matters

  Our success in generating revenues from governmental contracts depends our ability to comply with governmental regulations related to defense spending and procurement

• NewRisks Related to Regulatory Matters

  We, our outsourcing partners and our suppliers are, or may be subject to, substantial regulation and unfavorable changes to, or failure by us, our outsourcing partners or our suppliers to comply with these regulations could substantially harm our business and operating results

• NewRisks Related to Regulatory Matters

  We are exposed to risks related to tariffs, duties, and taxes that can significantly impact our global supply chains and operations, including, without limitation, the possibility of the increasing costs of components that we purchase from other countries or the shortage of, or difficulty in obtaining, such components

• NewRisks Related to Regulatory Matters

  Changes in U.S. tariff and global trade policies may materially and adversely affect our business

• NewRisks Related to Regulatory Matters

  Furthermore, the economic impact of the tariffs currently announced or that may be announced in the future, may impact the global supply chain and result in increased shipping costs or delays

• NewRisks Related to Regulatory Matters

  We and our customers are subject to changes in federal government policies in the energy sector that could impose substantial costs and uncertainty as policies shift over time

• NewRisks Related to Regulatory Matters

  We are subject to evolving laws, regulations, standards and contractual obligations related to data privacy and security, and our actual or perceived failure to comply with such obligations could harm our reputation, subject us to significant fines and liability or adversely affect our business

• NewRisks Related to Regulatory Matters

  We are subject to various environmental laws and regulations that could impose substantial costs upon us and cause delays in building our production facilities

• NewRisks Related to Capital and Tax Matters

  We may need to raise additional funds and these funds may not be available to us when we need them. If we cannot raise additional funds when we need them, our business, prospects, financial condition and operating results could be negatively affected

• NewRisks Related to Capital and Tax Matters

  Our ability to use net operating loss carryforwards and other tax attributes may be limited as a result of ownership changes

• NewRisks Related to Capital and Tax Matters

  We, or our potential customers, may not be able to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives. As a result, our business, prospects, financial condition and operating results may be adversely affected

• NewRisks Related to Ownership of Our Securities

  Concentration of ownership among our existing executive officers, directors and their respective affiliates may prevent new investors from influencing significant corporate decisions

• NewRisks Related to Ownership of Our Securities

  We may issue additional shares of common stock or shares of preferred stock, including under our equity incentive plans. Any such issuances would dilute the interest of our stockholders and likely present other risks

• NewRisks Related to Ownership of Our Securities

  Our failure to maintain compliance with the NYSE American’s continued listing requirements could result in the delisting of our common stock

• NewGeneral Risks

  Future product recalls could materially adversely affect our business, prospects, financial condition and operating results

• NewGeneral Risks

  We are or may be subject to risks associated with acquisitions

Dropped

• Dropped

  Contractual Obligations and Capital Resources

  Covered contractual obligations and capital resources.

• Dropped

  We manage our use of cash in the operation of our business to support the execution of our primary strategic goals including the design, development and sale of the KARNO generator. We primarily use cash for R&D activities, capital investments and general and administrative costs

  Covered cash management for R&D and operating goals.

• Dropped

  Critical Accounting Policies and Estimates

  Covered the use of GAAP estimates and assumptions in financial statements.

• Dropped

  We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates

  Covered critical accounting policies requiring management judgment.

• Dropped

  New and Recently Adopted Accounting Pronouncements

  Covered newly adopted FASB accounting pronouncements.

• Dropped

  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  Covered quantitative and qualitative market risk disclosures.

• Dropped

  Opinion on the financial statements

  Covered the independent auditor's opinion on financial statements.

• Dropped

  Change in accounting principle

  Covered changes in accounting principles for segment reporting.

• Dropped

  Net loss $ (52,048) $ (123,510)

  Covered net loss and operating cash flow adjustments.

• Dropped

  Carrying value adjustment to assets held for sale 6,464 —

  Covered changes in operating assets, liabilities, and investing cash flows.

• Dropped

  Basis of Presentation and Principles of Consolidation

  Covered the basis of presentation and consolidation principles.

• Dropped

  $ 0.5 $ 9.5 $ (2.0) $ 8.0

  Covered estimates of restructuring cash expenditures and charges.

• Dropped

  Concentration of Supplier Risk

• Dropped

  Cash and Cash Equivalents

• Dropped

  The Company has provided its corporate headquarters lessor with a letter of credit for $0.7 million to secure the performance of the Company’s lease obligations, backed by a restricted cash deposit to pay any draws on the letter of credit by the lessor

• Dropped

  The Company believes its valuation methods are appropriate and consistent with other market participants, however the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date

• Dropped

  Property and Equipment, Net

• Dropped

  Impairment of Long-Lived Assets

• Dropped

  U.S. Government Contracts

• Dropped

  Marketing, Promotional and Advertising Costs

• Dropped

  Research and Development Expense

• Dropped

  Recent Accounting Pronouncements

• Dropped

  In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), to enhance transparency and decision usefulness of income tax disclosures. The pronouncement is effective for fiscal years beginning after December 15, 2024 and we expect a material impact to our disclosures as a result of adoption

• Dropped

  Note 5. Fair Value Measurements

• Dropped

  Restricted cash 665 — — 665

• Dropped

  Restricted cash 8,583 — — 8,583

• Dropped

  2024 Equity Incentive Plan

• Dropped

  Employee and director restricted stock units (“RSUs”) for which a grant date has been established generally vest over one to three years from the date of grant. These awards generally become available to the recipient upon the satisfaction of a vesting condition based on a period of service

• Dropped

  Unvested at December 31, 2024 232,176 $ 1.81

• Dropped

  2020 Equity Incentive Plan

• Dropped

  Employee and director RSUs generally vest over one to three years from the date of grant. These awards become available to the recipient upon the satisfaction of a vesting condition based on a period of service, and performance and market conditions (for certain awards to employees)

• Dropped

  4 Excludes 633,750 shares underlying RSU awards with performance conditions, which have not been accounted for because no accounting grant date has been established. These excluded shares were not granted during the year ended December 31, 2024

• Dropped

  2016 Equity Incentive Plan

• Dropped

  Employee and nonemployee stock options generally vest over four years, with a maximum term of ten years from the date of grant. These awards become available to the recipient upon the satisfaction of a vesting condition based on a period of service

• Dropped

  Exercisable at December 31, 2024 188,229 $ 0.20 4.7 years

• Dropped

  Employee Stock Purchase Plan

• Dropped

  The Company enters into operating leases for its corporate office, temporary offices, vehicles and equipment. In addition, the Company may enter into arrangements whereby portions of the leased premises are subleased to third parties and are classified as operating leases

• Dropped

  The Company’s corporate office lease has a term through 2027 and includes the option to extend the term for up to two consecutive terms of five years, which was not reasonably certain to be exercised at the commencement date

• Dropped

  Total operating lease costs $ 3,176 $ 3,429

• Dropped

  Operating leases 8.6 % 8.7 %

• Dropped

  Note 9. Property and Equipment, Net

• Dropped

  Total property and equipment, net $ 25,920 $ 9,987

• Dropped

  Note 10. Accrued Expenses and Other Current Liabilities

• Dropped

  Total current tax expense $ — $ —

• Dropped

  Total deferred tax expense $ — $ —

• Dropped

  Deferred tax assets, net of valuation allowance 1,312 1,768

• Dropped

  Net deferred tax assets $ — $ —

• Dropped

  Economic Incentive Agreement

• Dropped

  Note 13. Net Loss Per Share

• Dropped

  Net loss attributable to common stockholders $ (52,048) $ (123,510)

• Dropped

  Net loss per share, basic and diluted $ (0.30) $ (0.68)

• Dropped

  Note 14. Supplemental Cash Flow Information

• Dropped

  Cash paid for taxes $ — $ —

• Dropped

  Evaluation of Disclosure Controls and Procedures

• Dropped

  Management’s Report on Internal Control over Financial Reporting

• Dropped

  Changes in Internal Control over Financial Reporting

• Dropped

  ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

• Dropped

  ITEM 11. EXECUTIVE COMPENSATION

• Dropped

  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

• Dropped

  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

• Dropped

  ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

• Dropped

  ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

• Dropped

  Exhibit Number Description

• Dropped

  Second Amended and Restated Certificate of Incorporation of the Company, dated October 1, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-38823) filed with the SEC on October 7, 2020)

• Dropped

  Description of Securities (incorporated by reference to Exhibit 4.4 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2020 (File No. 001-38823) filed with the SEC on May 17, 2021)

• Dropped

  Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

• Dropped

  ____________________________________________

All 37 risk factors

Headings as the filing states them, in filing order.

Other Hyliion Holdings 10-Ks

• FY2024 10-K risk factors

  67 risks

  Hyliion Holdings Corp.'s risk profile is dominated by the development and commercialization of its KARNO generator technology.

  Filed Feb 25, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.